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GlobalExcellenc

Annual Report 2007For the year ended March 31, 2007

On the Road to
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Global

Excellence

Investors

Shareholders

Communities

BusinessPartners

Environment

Customers

Since its establishment in 1918, Matsushita Electric Industrial

Co., Ltd. has been guided by its basic management philosophy,

which states that the mission of an enterprise is to contribute to

the progress and development of society and the wellbeing of

people worldwide through its business activities.

Matsushita is aiming to achieve global excellence. For us,

that means earning and retaining the support of stakeholders

worldwide by sustaining growth through continued innovation

and ensuring sound business activities on a global basis.

In line with its twin corporate vision of contributing to

realizing a ubiquitous networking society and

coexistence with the global environment, Matsushita

will strive for global excellence by working to drive a

sustained increase in corporate value.

Employees


3/122Matsushita Electric Industrial Co., Ltd. 2007 1

This Annual Report includes forward-looking statements (within the meaning of Section

27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange

Act of 1934) about Matsushita and its Group companies (the Matsushita Group). To theextent that statements in this Annual Report do not relate to historical or current facts, they

constitute forward-looking statements. These forward-looking statements are based on

the current assumptions and beliefs of the Matsushita Group in li ght of the information

currently available to it, and i nvolve known and unknown risks, uncertainties and other

factors. Such risks, uncertainties and other factors may cause the Matsushita Groups

actual results, performance, achievements or financial position to be materially different

from any future results, performance, achievements or financial position expressed or

implied by these forward-looking statements. Matsushita undertakes no obligation to

publicly update any forward-looking statements after the date of this Annual Report.

Investors are advised to consult any further disclosures by Matsushita in its subsequent

filings with the U.S. Securiti es and Exchange Commission pursuant to the Securities

Exchange Act of 1934.

The risks, uncertainties and other factors referred to above include, but are not limited

to, economic conditions, particularly consumer spending and corporate capital

expenditures in the United States, Europe, Japan, China and other Asian countries;

volatility in demand for electronic equipment and components from business and industrial

customers, as well as consumers in many product and geographical markets; currency

rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan,

Asian currencies and other currencies in which the Matsushita Group operates businesses,

or in which assets and liabilities of the Matsushita Group are denominated; the ability of theMatsushita Group to respond to rapid technological changes and changing consumer

preferences with timely and cost-effective introductions of new products in markets that

are highly competitive in terms of both price and technology; the ability of the Matsushita

Group to achieve its business objectives through joint ventures and other collaborative

agreements with other companies; the ability of the Matsushita Group to maintain

competitive strength in many product and geographical areas; the possibility of incurring

expenses resulting from any defects in products or services of the Matsushita Group; the

possibility that the Matsushita Group may face intellectual property infringement claims by

third parties; current and potential, direct and i ndirect restrictions imposed by other

countries over trade, manufacturing, labor and operations; fluctuations in market prices of

securities and other assets in which the Matsushita Group has holdings or changes in

valuation of long-lived assets, including property, plant and equipment and goodwill, and

deferred tax assets; future changes or revisions to accounting policies or accounting rules;

as well as natural disasters including earthquakes and other events that may negatively

impact business activities of the Matsushita Group. The factors listed above are not all-

inclusive and further information is contained in Matsushitas latest Annual Report on Form

20-F, which is on file with the U.S. Securities and Exchange Commission.

Disclaimer Regarding Forward-Looking Statements

2 Financial Highlights

4 To Our Stakeholders

6 Interview with the President

13Special Feature Overview of the New Mid-term Management Plan: GP3

Generate Steady Growth with Profitability

22 Business at a Glance

24 Business Review and Strategies

Contents

46 R&D and Intellectual Property

48 Corporate Governance

55 Corporate Social Responsibility

58 Directors, Corporate Auditors and Executive Officers59 Risk Factors

63 Financial Section

118 Principal Production Divisions and Subsidiaries

118 Investor Information

32Home

Appliances

38Componentsand Devices

43MEW andPanaHome

45JVC

45Other

24AVCNetworks


4/1222 Matsushita Electric Industrial Co., Ltd. 2007

Financial HighlightsMatsushita Electric Industrial Co., Ltd. and Subsidiaries

Years ended March 31, 2007, 2006 and 2005

Millions ofU.S. dollars,

Millions of yen, Percentage of except per shareexcept per share information previous year information

2007 2006 2005 2007/2006 2007

Net sales .............................................. 9,108,170 8,894,329 8,713,636 102.4% $77,188

Income before income taxes ................ 439,144 371,312 246,913 118.3% 3,722

Net income .......................................... 217,185 154,410 58,481 140.7% 1,841

Net income per share:

Basic ................................................ 99.50 69.48 25.49 143.2% $ 0.84

Diluted .............................................. 99.50 69.48 25.49 143.2 0.84

Cash dividends per share ..................... 25.00 17.50 15.25 142.9 0.21

Total assets (at year-end) ..................... 7,896,958 7,964,640 8,056,881 99.2% $66,923

Stockholders equity ............................ 3,916,741 3,787,621 3,544,252 103.4 33,193

Capital investment................................ 418,334 345,819 374,253 121.0% $ 3,545

R&D expenditures ................................ 578,087 564,781 615,524 102.4 4,899

Total employees (at year-end) .............. 328,645 334,402 334,752 98.3%

ROE ..................................................... 5.6% 4.2% 1.7%

Notes:

1. See Note 1 (n) to the consolidated financial statements with respect to the calculation of net income per share amounts.

2. Cash dividends per share reflect those paid during each fiscal year.

3. The figures for capital investment are for purchases of property, plant and equipment on an accrual basis, which reflects the effects of timing differences

between acquisition dates and payment dates.

4. U.S. dollar amounts are translated from yen at the rate of 118=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2007.

5. Matsushitas consolidated financial statements as of March 31, 2007 comprise the accounts of 653 consolidated companies, with 71 companies reflected by

the equity method.



Stockholders Equity

ROE

2003 2004 2005 2006 20071,000

0

1,000

2,000

3,000

4,000

2.0

0

2.0

4.0

6.0

8.0

Net Sales Income before Income Taxes &

Income before Income Taxes/

Sales Ratio

Net Income (Loss) &

Net Income (Loss)/Sales Ratio

Stockholders Equity and ROE Capital Investment R&D Expenditures

2003 2004 2005 2006 20070

2,000

4,000

6,000

8,000

10,000

Income before Income Taxes

Income before Income Taxes/Sales Ratio

2003 2004 2005 2006 20070

100

200

300

400

500

0

1.0

2.0

3.0

4.0

5.0

Net Income (Loss)

Net Income (Loss)/Sales Ratio

2003 2004 2005 2006 200740

0

40

80

200

160

120

240

0.4

0

0.4

1.2

0.8

1.6

2.4

2.0

2003 2004 2005 2006 20070

100

200

300

400

500

2003 2004 2005 2006 20070

200

400

600

800

Billions of yen % Billions of yen Billions of yen

Billions of yen Billions of yen % Billions of yen %



To Our Stakeholders

The fiscal year, ended March 31, 2007 (fiscal 2007), was a key year that brought our three-year

management plan Leap Ahead 21, launched in fiscal 2005, to a close. Amid a challenging operating

environment characterized by surging raw materials prices and intensifying global competition, weworked to reinforce our manufacturing capabilities in plasma TVs and other product categories. And we

actively invested in growth fields to cultivate new businesses that will drive future earnings. In parallel, we

focused on strengthening the Companys operations by raising management efficiency in a range of

areas and by pursuing further cost reductions. As a result of these efforts, we achieved our Leap Ahead

21 goals for fiscal 2007operating profit*1 to sales ratio of 5% or more and a positive Capital Cost

Management (CCM*2) index on a consolidated basis.

Fiscal 2008 is the first year of our new three-year management plan, GP3*3. The plan incorporates a

host of measures to accelerate the Companys growth. In terms of V-products, which are the core of

our growth strategies, we are targeting sales of approximately 2 trillion across a total of 73 product

categories. In overseas businesses, we aim to grow sales in emerging markets as well as the U.S. and

Europe. We are already building a framework to increase sales in Russia, Brazil and India, and our strategy

is to put greater emphasis on cutting-edge products in these markets. Another goal of the GP3 plan is to

use Groupwide innovation activities to transform Matsushita into a manufacturing-oriented company

one that combines all the business activities of the Group toward the launch of products, thereby con-

tributing to the creation of customer value. To achieve this, we will extend our most successful initiatives

to every corner of the Company to generate even greater benefits. At the same time, we will promote

wider collaboration across business fields and operating regions in order to reinforce product design

and quality, procurement, logistics, overseas sales and other areas of our operations.

Supported by these initiatives, we will launch Matsushita into a new phase of growth, aiming to

achieve sales of 10 trillion and ROE of 10% in fiscal 2010 by achieving steady growth with profitability.

We will also continue our ongoing initiatives to achieve global excellence.

In addition, Matsushita will take further steps to realize shareholder-oriented management in the

years ahead. Through the GP3 plan, we will increase corporate value, and at the same time, actively

return profits generated by the plans initiatives to all shareholders.

We will also continue to take all possible measures to ensure the quality and safety of our products.

Matsushita is committed to the idea that safety and quality, as the cornerstones of a manufacturing-

oriented company, must begin from the product design stage. We will thus strengthen ongoing efforts in

areas such as the analysis of product age-related degradation and user environments.

Thank you for your continued support.

June 2007

*1 For information about operating profit, see Note 4 on page 64.*2 CCM is an indicator created by Matsushita to evaluate return on capital. A positive CCM indicates that the return on invested capital meets

the minimum return expected by capital markets.

*3 For more details on the GP3 plan, see pages 13 to 21.



Kunio Nakamura, Chairman Fumio Ohtsubo, President



During the term of the Leap Ahead 21 plan, we applied the finishing touches to

Matsushitas business reorganization and restructuring. As a result, we achieved

our fiscal 2007 goals of an operating profit to sales ratio of 5% or more and a

positive Capital Cost Management (CCM) index on a consolidated basis.

In addition to these results, there were three major achievements of the Leap

Ahead 21 plan. First, we are now a leaner, more agile company. During the course

of the mid-term plan, we reduced total assets, used the Next Cell Production

System to cut factory inventories, and took advantage of IT innovations to reduce

product development and manufacturing lead times. We also implemented the

Cost Busters Project, a wide-ranging cost review that reduced Companywide

costs by more than 220 billion over the three years of the plan. The result of

these accomplishments is a more robust operating structure.

Interview with the President

Fiscal 2007 was the final year of the mid-term manage-

ment plan Leap Ahead 21. What did Matsushita achieve

with this plan and what issues remain?

Question1..........................

Answer.....................................



Second, we built strong business pillars to support the Companys operations.

Here, we focused on reinforcing product competitiveness and especially V-

productsnew products aimed at capturing the leading share in their respectivemarket categories. V-products include both finished products and devices, and

our new lineup in both these areas received strong market support, significantly

helping to boost Matsushitas profitability.

Third, we promoted greater collaboration with Matsushita Electric Works, Ltd.

(MEW). By integrating sales and manufacturing functions, implementing a shared

brand strategy, and working together to enhance product lineups, we generated

synergies with MEW that resulted in a sales increase of more than 130 billion

over the two years from fiscal 2006 to fiscal 2007.

However, there are still issues we need to tackle. These include sustaining

growth, increasing the profitability of overseas businesses, raising the marginalprofit ratio, and eliminating major quality problems such as that experienced with

defects in certain FF (Forced-Flue)-type kerosene fan heaters. Realizing steady

growth in markets worldwide is also an important issue.

Matsushita aims to earn the support of all its stakeholders worldwide by sustain-

ing growth through continued innovation and ensuring sound business activities

on a global basis. This is what global excellence means at Matsushita. We have

set several specific targets to realize this vision: achieve at least 10 trillion in net

sales, with 60% or more of this figure generated overseas, an operating profit to

sales ratio of 10% or more, and return on equity (ROE), which enables a clear

comparison with companies worldwide, of at least 10%. We are also aiming to

ensure at least 30% of our products capture the top market share worldwide, as

well as gain a leading global reputation in terms of corporate social responsibility

(CSR) and a trusted brand.

Matsushita aims to achieve global excellence.

What does this mean in concrete terms?Question2.......................

Answer.....................................



Through the GP3 plan, Matsushita will strengthen measures to accelerate growth.

The plans name is made up of three elements: Global Progress, evolving through

global sales expansion; Global Profit, enhancing profitability worldwide; and Global

Panasonic, building a globally trusted brand. These will be our overarching goals

during the course of the plan. We do not plan to achieve our objectives through

particularly ingenious means, rather we aim to generate steady growth with profit-ability to put us in a position to challenge for global excellence by fiscal 2010. We

have set final-year targets for the plan of 10 trillion in sales and ROE of 10%.

The GP3 plan has three priority themesdouble-digit growth in overseas

sales; four strategic businesses; and continuous selection and concentration.

First, we will aim for growth averaging at least 10% annually in overseas sales of

consumer products. In particular, we will reinforce initiatives in emerging markets.

Second, with regard to four strategic businesses, we will focus on our digital AV

business, automotive electronics business, businesses providing comfortable

living, and semiconductors and other devices businesses. Through collaboration

and vertical integration between these businesses, we will strive to maximize

Groupwide synergies, while making every effort to drive steady growth in each

business. Finally, under the third theme, we will concentrate management re-

sources on competitive and profitable business areas. Over the three years of the

plan, we intend to make capital investments of 1.5 trillion in projects such as a

fifth plasma display panel (PDP) plant in Japan. We have also earmarked 1.8

trillion for R&D investments, which will be focused on prioritized R&D themes and

the development of key devices such as semiconductors.

Moreover, in order to accelerate Groupwide innovation activities aimed at trans-

forming Matsushita into a manufacturing-oriented company, we established a

Corporate Division for Promoting Manufacturing-oriented Innovation on April 1,

2007, headed by myself. Matsushita defines a manufacturing-oriented company as

one that combines all the business activities of the Group toward the launch of prod-

ucts, thereby contributing to the creation of customer value. For example, in terms of

cost-cutting, a perennial theme for manufacturers, we have achieved varying levels of

success throughout the Group depending on the initiatives implemented at each

operating site. Going forward, by unifying these initiatives more effectively and draw-

ing on best practice, we expect to achieve substantial overall cost reductions. In order

to realize our growth strategies, it is essential that we implement qualitative manage-

ment reforms in pursuit of this vision of becoming a manufacturing-oriented company.

In January 2007, Matsushita announced its new three-

year management plan, GP3, starting in fiscal 2008.

Please summarize the plan and your own views about it.Question3

.......................

Answer.....................................



During the Leap Ahead 21 plan, we put priority on the operating profit to sales

ratio as an indicator that shows how profitable a company is, excluding the

impact of business restructuring costs. Now, as we move into a new growth

phase with the GP3 plan, we have decided to use sales to measure growth, and

ROE to measure capital efficiency. ROE is an international performance bench-

mark used widely in capital markets. Under the GP3 plan, we aim to improve netincome, which is the final word in measuring performance, and further enhance

shareholder-oriented management.

In fiscal 2007, global demand for 37-inch or larger flat-panel TVs totaled approxi-

mately 20 million units. In fiscal 2010, this figure is expected to reach around 50

million units, split equally between plasma display and LCD models. Based on this

forecast, we are aiming to capture a 25% share of the global market for 37-inch

or larger flat-panel TVs in fiscal 2010. Matsushita plans to offer both plasma and

LCD models by using their respective advantages. However, in larger screen

models, we believe plasma TVs have the competitive edge in terms of cost and

other factors.

Matsushita is already one of the worlds biggest producers of PDPs. But we

plan to add to existing capacity with the construction of our fifth PDP plant in

Japan through total investment of 280 billion. We will begin construction in

November 2007 with mass production scheduled to start in May 2009. When

operating at full capacity, the plant will have a monthly output of 1 million units

based on 42-inch panels. Efficiency will also be improved with a manufacturing

process that yields more than ten 42-inch panels from a single sheet of glass,

the worlds highest yield.

In 42-inch flat-panel TVs, where competition with LCD TVs is the most

intense, prices in fiscal 2007 fell by around 30%. Although the pace of decline

The GP3 plan sets targets of 10 trillion in sales and

ROE of 10% for fiscal 2010. Why have you adoptedROE instead of the operating profit to sales ratio used

in the past?

Question4.......................

Answer.....................................

Competition in the flat-panel TV market is increasingly

intense. How then does Matsushita intend to grow its

business? Also, what is your outlook for prices and how

do you plan to raise profitability?

Question5.......................

Answer.....................................



should slow, we are projecting continuing price declines. In response, Matsushita

will strive to reduce costs at an even greater rate than the fall in prices to further

boost profitability. By accelerating the shift to larger-screen, full HD* models, andcreating a more user-friendly experience with products such as the VIERA Link,

which allows users to also control their DVD recorders, home theater systems,

and other equipment using a single remote control, we aim to offer more distinct,

high-value-added products that will stand firm against falling prices.

* Full HD: 2.07 million pixels (1,920 horizontal x 1,080 vertical pixels)

The U.S. and Europe will remain significant overseas markets for Matsushita.

However, we also plan to focus on emerging markets like BRICs*, where further

expansion is forecast. I have toured the BRICs countries and other similar markets.

What struck me in particular was the rapid rise in the number of wealthier con-

sumers, who I believe offer the potential for explosive growth in demand at any

time. Not only that, many of these consumers want the latest products, so we

need to implement marketing strategies that target this demand by actively

launching cutting-edge products. In this context, we established a Russia Division,

India Coordination Department and Brazil Coordination Department in April 2007 to

boost sales in these markets. Instead of waiting for demand to materialize, we

plan to steal a march on our rivals by taking active steps to generate demand

with new products in new markets. We believe that this approach will ultimately

boost sales.

* BRICs stands for Brazil, Russia, India and China.

Overseas sales growth is a priority theme in the GP3plan. What are the main points of your overseas

growth strategy?

Question6.......................

Answer.....................................



Matsushita has adopted a vertically integrated business model designed to

generate maximum synergies between component and device and finished product

divisions. Components and devices are the key to adding value to finished

products. It is vital therefore that these components incorporate more advanced

functions and are distinct. Leveraging the inherent advantage of having in-house

component and device divisions, we will strive to create products with high-added-value by fusing a whole host of technologies covering materials, compo-

nents, devices and equipment. In particular, one of our greatest strengths is our

proprietary capability to develop and produce system LSIs, which are the deter-

mining factor in the competitiveness of digital products. For example, in the semi-

conductor business, we are incorporating our state-of-the-art technologies in

finished Matsushita products, thereby helping to create a more distinct product

lineup and contributing to growth. This approach, in parallel with efforts to boost

sales to external customers, is aimed at further raising profitability. In other com-

ponent and device divisions outside semiconductors, we are focusing on profit-

able business fields where we can capture high market shares and profitability.

In all these areas, we are targeting the leading global market share.

Holding net cash allows us to make rapid decisions in response to changes in the

operating environment. While maintaining a certain level of funds, we plan to use

this cash as effectively as possible. In particular, in order to sustain Matsushitas

continued development, it is essential that we actively invest in R&D and facilities.

We must also look at investments that will generate greater returns than in the

past. We intend to invest in strengthening core businesses such as PDPs and

semiconductors, and in acquiring intellectual property and other assets to support

our operations.

Collaboration between component and device and

finished product divisions is one of Matsushitas strengths.What measures are you planning to implement in your

components and devices divisions in this regard?

Question7.......................

Answer.....................................

Matsushita currently has net cash reserves of more than

1.4 trillion. How do you plan to use these funds and

what is your policy on returning profits to shareholders?

Question8.......................

Answer.....................................



Through execution of the GP3 plan, we will

seek to increase corporate value, and at the

same time, actively return profits generated bythe plans initiatives to all shareholders as part

of our efforts to realize shareholder-oriented

management. Matsushita aims to pay stable

and continuous increases in cash dividends.

The Company plans to raise cash dividends per

share for fiscal 2008 to 35, up from 30 per

share in fiscal 2007. The Company will also

continue to actively buy back its own shares. Matsushita plans to repurchase

from the market a maximum of 50 mill ion shares, up to 100 bill ion, from May

2007 to late March 2008.The ESV* Plan, which sets out rules to allow shareholders to decide whether

large-scale purchases of the Companys shares should be accepted or not, will

also remain in place in fiscal 2008.

*ESV stands for Enhancement of Shareholder Value.

Matsushitas unwavering management philosophy of contributing to society as a

public entity has guided its business activities since the Companys founding.

Matsushita considers implementing this management philosophy to be the core

essence of CSR. In this context, we put particular emphasis on promoting

environmental management, enforcing compliance and reinforcing information

security. Building on this, I want to ensure all stakeholders feel and believe in our

corporate conscience. Simply adhering to rules and regulations is not enough

we need to demonstrate that Matsushita is a company that can make careful

judgments on how it should act based on how beneficial those actions are to

society as a whole.

Corporate social responsibility (CSR) is increasinglyimportant. What is your basic approach to CSR?Question9

.......................

Answer.....................................

Higher return on capital and proactive return to shareholders

through dividends and share repurchases

Dividends

Sharerepurchases

Aim at stable and continuous dividend growth targeting

a consolidated dividend payout of approx. 3040%

aImprovement of dividends on equity

Continue agile share repurchasing in line with

growth strategy

aImprovement of shareholder value per share



GlobalSpecial Feature

Generate Steady Growth With Profitability

Under the Leap Ahead 21 plan, the Matsushita Group set minimum targets of an

operating profit to sales ratio of 5% or more and a positive CCM index to stay

competitive globally. By implementing a whole range of initiatives, the Company

achieved these goals.

Global Excellence

Put Matsushita in a position

to challenge for global excellence

GP3 Plan

Fiscal 2010 Targets

Net sales of 10 trillion, ROE of 10%

Mid-term growth strategies

Double-digit growth in overseas sales

Four strategic businesses

Continuous selection and concentration

Fiscal

2010

Fiscal

2007

GP3 Plan

GlobalProfit

GlobalPanasonic

GlobalProgress

With Leap Ahead 21,

Matsushitas previous mid-term

management plan completed

in fiscal 2007, the Company

put in place the foundations to

support sustained growth.

Now, through the GP3 Plan,

initiated on April 1, 2007 and

running until fiscal 2010, the

Company will strive to generate

steady growth with profitability

to put Matsushita in a position

to challenge for global excel-

lence. In this feature section,

we highlight the plans core

mid-term growth strategies.a

a

Overview of the New Mid-term Management Plan: GP3

Matsushita Electric Industrial Co., Ltd. 2007 13



Aiming to achieve growth averaging at least 10% annually in overseas sales of consumer products,

Matsushita will conduct local-oriented marketing tailored to regional characteristics, improve product

competitiveness through collaboration between production and sales divisions, and strengthen brands

based on product competitiveness. Based on these approaches, Matsushita will accelerate business

development overseas, particularly in emerging markets.

Double-digit Growth in Overseas SalesAccelerating business development in emerging markets

Marketing tailored to regional characteristics

In North America and Europe, markets where there is strong

interest in the latest technologies and products, Matsushita

aims to raise sales by 310 billion during the 3 years of theplan. Matsushita will strengthen ties with leading volume

retailers to boost sales, mainly of flat-panel TVs and other

digital AV products. Specifically, the Company will expand and

strengthen XCS* activities in North America and reinforce its

sales framework in Eastern Europe.

In growth markets like China and other parts of Asia, the

worlds most populous region, the Company plans to increase

sales by 340 billion during the plan. Concrete steps will

include continuing to actively target key markets for washing

machines, refrigerators and other white goods, and beauty

and health-related home appliances. The Company also aims

to grow its digital AV products business, which includes flat-

panel TVs and digital cameras, by targeting the growing

number of wealthier consumers.

In the BRICs countries, Vietnam and other emergingmarkets, which Matsushita has positioned as strategic

markets to boost overseas sales, the Company is targeting an

increase in sales of consumer products of 200 billion over 3

years by actively developing its business.

Initiatives in Emerging Markets

* Extreme Customer Satisfaction: high-quality services designed tomake Matsushita products stand out in the marketplace. For ex-

ample, operators at our plasma TV call center in Virginia, U.S. (photo)

not only provide after-sales services, but also offer advice and re-spond to queries from potential customers.

India

Target wealthier customers

with an initial focus on flat-

panel TVs and air conditioners

Vietnam

Roll out a strategy targeting

six main urban centers

Launch products tailored tothe local market

Strengthen brand power

Brazil

Increase sales of digital AVproducts in line with expan-

sion in local production

China

Overhaul sales framework andstrengthen product lineup

Develop V-products thatreflect feedback from Chinese

consumers

Russia and Other CIS Countries

Expand sales to volume retailers

Focus on flat panel TVs and

digital cameras



Manufacturing That Draws on Customer Feedback

The Global Plasma Roadshow (Left: Florida, U.S.; Right: Singapore)

Sales divisions

Reflect customer feedbackfrom each country and region

Strengthen

product lineup

Reinforce business infrastructure

NorthAmerica

CISChinaAsiaEuropeLatin

America

AVC

Componentsand devices

Refrigeration,air conditioningand heating

Homeappliances

Automotiveelectronics

Fixed-linecommunications

Improving product competitiveness through

collaboration between production and sales

divisions

To continue to grow our business on a global scale, it is vital

that we supply products with local added-value designed for the

living environments and lifestyles of each region. In products like

washing machines and refrigerators that play important every-

day roles in the home, Matsushita will leverage energy- and

water-saving technologies developed for the domestic market

and reflect feedback from local customers in new products to

significantly boost sales.

Strengthening brands based on product

competitiveness

The Company plans to expand its Global Plasma Roadshow,

which is a product display event held over a few days in major

cities in shopping malls, stations and other sites that attract

large numbers of people. Highlighting Matsushitas digital AV

products centered on plasma TVs, the event allows ordinary

customers to touch and experience its products first-hand.

The roadshow has already toured the U.S. and France, and

we plan to take it to the worlds main urban centers, including

around 80 cities in fiscal 2008. This will allow Matsushita to

highlight the advanced capabilities of its digital AV products

and reinforce its brands.

Additionally, with an eye on a potential surge in demand in

the BRICs countries, Vietnam and other emerging markets, the

Company plans to aggressively lead the development of new

markets to strengthen its brands in the years ahead.

Manufacturingdivision

s



Matsushita has selected four strategic businesses to drive growth for the entire Matsushita Group. The

Company has named them the ABCD Quartet: Digital AV Networks, Car Electronics, Appliance Solutions and

Black Box Devices. Through collaboration and vertical integration among these businesses, Matsushita will

strive to maximize Groupwide synergies, while making every effort to drive steady growth with profitability in

each business.

Four Strategic BusinessesMaximizing Group synergies to drive growth

Black Box DevicesSemiconductors/components

and devices business

Increase the sales ratio of

globally leading devices

More distinct productswith black box devices

Collaboration betweenproducts and solutions

More distinct productswith black box devices

Collaboration betweenproducts and solutions

Increasing sales ofcomponents and devices

Improving quality ofautomotive electronics

Digital AV NetworksDigital AV business

Focus on five strategic products,

including flat-panel TVs, to drive growth

Car ElectronicsAutomotive electronics business

Contribute to the creation of

automobiles and a motoring society

that are both safe and inspiring

Appliance SolutionsBusinesses providing

comfortable living

Offer total solutions for homes

and other buildings



Matsushita has selected five strategic product categories in its

digital AV business: plasma TVs, LCD TVs, digital cameras,

Blu-ray (BD) recorders and drives, and HD camcorders.

Demand for flat-panel TVs is expanding worldwide. The

Company plans to tap into this demand by highlighting the

strengths of its plasma TVssuperior moving image response

and picture contrastwhile working to significantly improve

power consumption and other areas of performance. By

enhancing cost competitiveness and image resolution,

Matsushita will offer a wider range of full HD products. Our

goal is to capture 25% of the global market for 37-inch or

larger flat-panel TVs in fiscal 2010.

In digital cameras, the Company aims to win 15% of the

Digital AV NetworksDigital AV business

Focus on five strategic products,

including flat-panel TVs, to drive growth

global market in fiscal 2010 to establish Matsushita as a major

camera manufacturer. To achieve this, the Company will ex-

pand its product lineups, including SLR cameras, and leverage

its black box technologies to reinforce its key components and

devices manufactured in-house.

Matsushitas HD camcorders are compact, lightweight and

sturdy, and also offer excellent picture quality, while its BD re-

corders and drives incorporate advanced technologies and are

cost-competitive. Using these strengths, the Company plans to

capture global market shares for these products in fiscal 2010

of at least 40% and 35%, respectively, as it looks to grow these

products into the third and fourth key businesses after flat-panel

TVs and digital cameras in its digital AV business.

HD camcorders

BD recorders/drives

Digital cameras

LCD TVs

Plasma TVs

Flat-panel

TVs

1.7 trillion

1 trillion

+700 billion

Fiscal2007

Fiscal2010

Sales Target

Plasma TVs

Digital cameras

BD recorders/drivesHD camcorders

LCD TVs

Five Strategic Products to Drive Growth

Matsushita provides networkable products

centered on VIERA flat-panel TVs



Car ElectronicsAutomotive electronics business

Contribute to the creation of automobiles and a motoring society

that are both safe and inspiring

Drawing on the Matsushita Groups wide range of advanced

technologies from digital AV equipment to key devices, and

focusing on the themes of automotive multimedia, the environ-

ment and energy, and safety and security, Matsushita will

continue to contribute to the creation of automobiles and a

motoring society that are both safe and inspiring through its

outstanding technologies and meticulous approach to

manufacturing.

Automotive multimedia

By leveraging Group-wide digital AV technologies, the Company

will develop comfortable, convenient and easy-to-use prod-

ucts such as car audio equipment, car navigation systems and

rear-seat entertainment systems. Matsushitas aim is to offer

more comfortable car interior spaces.

Three Business Fields

Automotive multimediaLeverage Group-wide strengths

Environment and energyUse ETC and compact, lightweight

technologies

Safety and securityUtilize sensor and camera technologies

Automotive multimedia

Safety and security

Environment and energy

950 billion

750 billion

Fiscal2007

Fiscal2010

+200 billion

Sales Target

The environment and energy

By providing Electronic Toll Collection (ETC) systems, the

Company helps to relieve congestion at toll booths, thereby

reducing vehicular emissions of CO2 and NOX. And by devel-

oping fuel cells and electric double layer capacitors for hybrid

vehicles and providing more compact and lightweight devices,

the Company will help to boost fuel efficiency. In these and

other ways, Matsushita will contribute to the realization of a

motoring society that can coexist with the global environment.

Safety and security

The Company will play a key role in making motoring more

comfortable for customers. For example, Matsushitas com-

pact rear-view cameras give drivers better visibility when

reversing, while its automotive sensors support trouble-free

driving. The Company will also actively participate in efforts to

realize a society with Intelligent Transport Systems (ITS).



Competitive

individual products

New value creation

through product

combinations

Add valueto functions

Add value toliving spaces

Add value tolifestyles

By marshalling the collective strengths of the entire Matsushita

Group, the Company aims to propose more comfortable life-

styles by supplying various new equipment and systems tai-

lored to living environments.

In addition to the functional value of individual products,

Matsushita will add value to lifestyles and living spaces based on

collaboration between a wide range of products. Specifically,

the Company will offer total solutions for homes and other

buildings by bringing together equipment from diverse fields

such as home appliances, air conditioning and purification,

beauty and health, security, household facilities, AVC and

Appliance SolutionsBusinesses providing comfortable living

Offer total solutions for homes and other buildings

lighting. In security for homes and offices, an area expected to

see growth, Matsushita will reinforce product and cost com-

petitiveness. To develop this total solutions approach, the

Company has set up a cross-Group project that will reinforce

businesses providing comfortable living. This project will prima-

rily focus on encouraging greater cooperation between pro-

duction and sales divisions, combining technology assets, and

boosting solution proposal capabilities.

Through these initiatives, the Company aims to achieve

sales of approximately 3 trillion in fiscal 2010 in businesses

providing comfortable living.

Sales increase through synergies

Each business field

3 trillion

2.6 trillion

Fiscal2007

Fiscal2010

Each business field

+240 billion

Sales increasethrough synergies

+180 billion

Sales Target

Add Value to Functions, Lifestyles and Living Spaces



In the semiconductor business, Matsushita will incorporate key

devices founded on cutting-edge technologies into its finished

products to enhance distinctiveness and drive growth in its

finished product divisions.

In October 2005, Matsushita became the first company

in the industry to begin full-scale mass production of 65-

nanometer process system LSIs using 300mm wafers. Now

the Company plans to enhance its ability to respond to the

increasing functionality and cost competitiveness of system

LSIs by, among other steps, accelerating the shift to 45-

nanometer processes and raising the performance of its Inte-

grated Platform, which is designed to meet needs for more

networked products.

Black Box DevicesSemiconductors/components and devices business

Increase the sales ratio of globally leading devices

In addition, Matsushita will reinforce its solution capabilities

to increase sales to customers outside the Matsushita Group

in order to ensure growth and boost profits in the semiconduc-

tor business.

In other device businesses, the Company will focus on

areas where it already has high market shares and margins,

aiming to capture the leading global market positions in indi-

vidual device fields.

Based on these initiatives, Matsushita is targeting a com-

bined increase in sales of around 240 billion in the semicon-

ductor and other device businesses over the next 3 years.

Semiconductors

Other devices

1.92 trillion

1.68 trillion

Fiscal2007

Fiscal2010

+240 billion

Sales Target

Focus on industries andbusinesses where Matsushita

has a competitive edgeFiscal 2010 Target:

Sales ratio of 50% for deviceswith No. 1 market shares

ALIVH*

Chip tuners Gyrosensors

Specialty polymer aluminum

electrolytic capacitors

Capacitors forhybrid vehicles

Lithium-ionbatteries

Narrow pitch connectors

Electronic ballast

Fan motors for compactair conditioners

Polygon mirror-scannermotors

Car speakers

Light touch switches

Supply cutting-edge systemLSIs for finished products

* Any Layer Inner Via Hole;high-density printed circuit boards

A Strong Lineup of Components and Devices to Drive Growth



Matsushita engages in a wide range of businesses. In order to achieve global excellence, the Company has

to realize steady growth with profitability in each of these businesses. To do this, Matsushita will better

allocate its management resources such as personnel, funds and facilities to businesses where it is com-

petitive and can generate profits.

As strategic investments to drive growth, Matsushita will invest in facilities and equipment, and research

and development (R&D). The Company will also invest to save time in business development.

Continuous Selection and ConcentrationConcentrate resources on competitive and profitable business areas

Sustained capital investment

1.5 trillion over 3 yearsMatsushita will aggressively invest in

high-growth businesses and in

improving productivity. For example,

to further upgrade the plasma TV

production framework, the Company

will build its fifth domestic PDP plant,

which will be the worlds largest. This

will be part of an overall capital

investment program totaling approxi-

mately 1.5 trillion over 3 years.

Sustained investment in R&D

1.8 trillion over 3 yearsOver the next 3 years, Matsushita

plans to invest approximately 1.8

trillion in advanced priority themes,

key devices centered on semicon-

ductors, and other areas. Going

forward, the Company intends to

step up R&D activities as part of its

efforts to maintain growth.

Investment to save time in

business developmentWhere necessary, Matsushita plans

to invest in acquiring technology and

intellectual property from outside the

Group, and in some cases, M&As to

complement existing businesses.

These investments will save the

Company time in developing busi-

nesses, thereby accelerating growth.

Matsushitas Fifth Domestic PDP PlantTo respond to rapidly rising global demand for large-screen flat-

panel TVs, Matsushita plans to construct its fifth domestic PDP

plant in Amagasaki City, Hyogo Prefecture. The new plant will be

located on land adjacent to the existing third and fourth domestic

PDP plants. With investment of approximately 280 billion, con-

struction will begin in November 2007 and the plant is scheduled

to become operational in May 2009. The plant will be capable ofproducing 1 million units (based on 42-inch panels) a month when

fully operational. This will make it the largest facility of its type

anywhere in the world.

The plant will also boast higher productivity: by further improv-

ing Matsushitas unique PDP processing technologies and manu-

facturing systems, and adopting the latest production equipment,

the plant will be capable of producing more than ten PDP panels

(based on 42-inch panels) from one sheet of glass, the worlds

largest number of panels per sheet.

Third domestic

PDP plant

Fourth domestic

PDP plant



Business at a Glance

Notes 1. Under the collaboration with MEW, the Company reorganized business and sales channels in such areas as electrical construction materials, building equipment and home appliances. Accordingly salesresults for fiscal 2005 for the Home Appliances and MEW and PanaHome categories have been reclassified to conform with fiscal 2006 sales results for those product categories.

2. Sales composition for each segment includes intersegment transactions.

3. The Healthcare Business Company was integrated with Panasonic Shikoku Electronics Co., Ltd. on April 1, 2007.

38%

AVC

NETWORKS

Percentage of

Fiscal 2007 Sales

Panasonic AVC Networks Company

Panasonic Communications Co., Ltd.

Panasonic Mobile Communications Co., Ltd.

Panasonic Automotive Systems Company

Panasonic System Solutions Company

Panasonic Shikoku Electronics Co., Ltd.

SalesTrillions of yen

Business Domain Companies and

Group Companies (as of March 31, 2007)

Main Products

Plasma, LCD and CRT TVs, DVD recorders/players,

VCRs, camcorders, digital cameras, compact disc

(CD), Mini Disc (MD) and Secure Digital (SD) players,

other personal and home audio equipment, SD

Memory Cards and other recordable media, optical

pickup and other electro-optic devices, PCs, optical

disc drives, copiers, printers, telephones, mobile

phones, facsimile equipment, broadcast- and

business-use AV equipment, communicationsnetwork-related equipment, traffic-related systems,

car AVC equipment, etc.

Segment ProfitBillions of yen %

0

1

2

3

4

2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

Profit/sales ratio

70

0

70

140

210

3

0

3

6

9

12%

HOME

APPLIANCES

Percentage of

Fiscal 2007 Sales

Home Appliances Group

Matsushita Home Appliances Company

Matsushita Refrigeration Company

Healthcare Business Company

Lighting Company

Matsushita Ecology Systems Co., Ltd.




Main Products

Refrigerators, room air conditioners, washing

machines, clothes dryers, vacuum cleaners,

electric irons, microwave ovens, rice cookers,

other cooking appliances, dish washer/dryers,

electric fans, air purifiers, electric heating

equipment, electric hot water supply equipment,

sanitary equipment, healthcare equipment, electric

lamps, ventilation and air-conditioning equipment,

car air conditioners, compressors, vendingmachines, medical equipment, etc.


0

1

2

3

4

2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

Profit/sales ratio

70

0

70

140

210

3

0

3

6

9

13%

COMPONENTS

AND DEVICES

Percentage of

Fiscal 2007 Sales

Semiconductor Company

Panasonic Electronic Devices Co., Ltd.

Matsushita Battery Industrial Co., Ltd.

Motor Company

Others




Main Products

Semiconductors, general components (capacitors,

modules, circuit boards, power supply and

inductive products, circuit components, electro-

mechanical components, speakers, etc.) electric

motors, batteries, etc.


0

1

2

3

4

2003 2004 2005 2006 2007

70

0

70

140

210

3

0

3

6

9

2003 2004 2005 2006 2007

Profit/sales ratio

(Years ended March 31)



17%

MEW AND

PANAHOME

Percentage of

Fiscal 2007 Sales

Matsushita Electric Works, Ltd.

PanaHome Corporation




Main Products

Lighting fixtures, wiring devices, distribution

panelboards, personal-care products, health

enhancing products, water-related products,

modular kitchen systems, interior furnishing

materials, exterior finishing materials, electronic

and plastic materials, automation controls,

detached housing, rental apartment housing,

medical and nursing care facilities, home

remodeling, residential real estate, etc.


0

1

2

3

4

2003 2004 2005 2006 2007

70

0

70

140

210

3

0

3

6

9

2003 2004 2005 2006 2007

Profit/sales ratio

6%

JVC

Percentage of

Fiscal 2007 Sales

Victor Company of Japan, Ltd.




Main Products

LCD, rear projection and CRT TVs, VCRs,

camcorders, DVD recorders/players, CD/DVD/MD

audio systems and other audio equipment, car AV

equipment, business-use AV systems, motors and

other components for precision equipment,

recordable media, AV software for DVD, CD and

video tapes, AV furniture, etc.

Segment Profit (Loss)Billions of yen %

0

1

2

3

4

2003 2004 2005 2006 2007

70

0

70

140

210

3

0

3

6

9

2003 2004 2005 2006 2007

Profit/sales ratio

14%

OTHER

Percentage of

Fiscal 2007 Sales

Panasonic Factory Solutions Co., Ltd.

Matsushita Welding Systems Co., Ltd.

Others




Main Products

Electronic-components-mounting machines,

industrial robots, welding equipment, bicycles,

imported materials and components, etc.


0

1

2

3

4

2003 2004 2005 2006 2007

70

0

70

140

210

3

0

3

6

9

2003 2004 2005 2006 2007

Profit/sales ratio



Incorporating Matsushitas cutting-edge technologies, AVC Networks provides products, software, ser-

vices and solutions that contribute to the realization of a ubiquitous networking society. In fiscal 2007,

sales of digital AV products such as plasma TVs and digital cameras increased significantly thanks to a

vertical integrated business model that enhances product and cost competitiveness through the in-house

manufacturing of key components and devices. In information and communications equipment, although

sales of mobile phones remained sluggish, increased sales were recorded in automotive electronics. The

Company also implemented initiatives to strengthen its home networks business and security-related

systems business.

For the future, Matsushita will leverage core strengths in digital AV technologies to pursue enhanced

functionality, convenience and ease of use, with the goal of delivering products, services and systems that

contribute to the realization of a ubiquitous networking society.

AVC NETWORKS

Business Review and Strategies



VIERA Link*

Matsushita has launched the VIERA Link, which

allows users to control a variety of AV equipment,

based around flat-panel VIERA TVs, with a single

remote control. With the VIERA Link, the Company

offers solutions that enable people to enjoy

audiovisual experiences more easily.

* In the U.S., Canada and some other regions, this

function is sometimes called EZ-Sync.



In the AVC business, Matsushita is

currently promoting its 3D value chain

strategy, which encompasses digital TV

(DTV), DVD and SD Memory Card

businesses. Based on this strategy, the

Company is working to expand its AVC

business globally by generating synergies

in technologies and products.

In fiscal 2007, Matsushita strengthened its lineup ofproducts and led the industry in making AV equipment

easier to use with a function called the VIERA Link, centered

on flat-panel VIERA TVs. In addition to using its existing SD

Memory Card as a bridge media for music as well as still

and moving images, Matsushita is proposing new ways of

using AV equipment and providing new value by promoting

enhanced networking of equipment.

Regarding flat-panel TVs, where the trend is toward

larger and higher-definition screens amid a global shift to

digital broadcasting, the Company recorded a significant

increase in sales, particularly of plasma TVs. With the launch

of its 103-inch model, the worlds largest*1, and other full

HD compatible products in Japan and overseas, Matsushita

created a more extensive lineup. In addition, the Company

offered more distinct high-value-added functions creating a

more user-friendly experience with products such as the

VIERA Link. These initiatives helped Matsushita to maintain

the leading market share in plasma TVs in Japan, the United

States and Europe in fiscal 2007. In terms of plasma display

panel (PDP) production, the Companys third domestic PDP

A full HD plasma TV that realizes excellent

picture quality and is easy to use

plant came fully on stream in June 2006, realizing a globalmonthly production capacity of 460,000 units (based on 42-

inch panels). In order to meet rapidly expanding worldwide

demand for PDPs, Matsushita started operation of its fourth

domestic PDP plant in June 2007, ahead of schedule. The

Company plans to begin construction of its fi fth plant the

following November. As a result, Matsushita will further

increase its PDP production capacity, already one of the

largest in the world.

In liquid crystal display (LCD) TVs, products which

feature IPS*2 technology to realize vivid color even from a

wide angle, have been well received in markets worldwide

due to their high picture quality and performance. This

helped the Company to capture around 20% of the domes-

tic market for LCD TVs in the 26- to 32-inch range.

Looking forward, the Company plans to expand its flat-

panel TV business further with the aim of achieving a global

market share of 25% in 37-inch or larger flat-panel TVs in

fiscal 2010.

*1As of July 19, 2006; Matsushita estimate.

*2 In-Plane-Switching mode system utilizes horizontally oriented liquid crystal

molecules to provide for wider viewing angles.

AVC Business



Sales of the DIGA series of DVD recorders, particularlyHD-compatible models in the domestic market, were strong

amid rising demand for high-quality video recording due to

the spread of digital HD broadcasting. The Company

introduced Blu-ray disc (BD) players in the U.S., Europe

and other markets in September 2006, and BD recorders

in Japan in November 2006. In addition, Matsushita put

particular emphasis on making AV equipment more user-

friendly with VIERA Link and other innovations. As a result

of these initiatives, Matsushita maintained its leading

global share in the DVD recorder market. Looking forward,

the Company will focus on accelerating compatibility with

HD formats and further pursuing user-friendliness.

The LUMIX series of digital cameras steadily increasedmarket share. This reflected the introduction, ahead of other

companies, of models featuring an Optical Image Stabilizer,

and the effective use of Matsushitas in-house key device

manufacturing strengths to create more compact cameras

with even higher picture quality. In fiscal 2007, cameras

featuring a 28mm wide-angle lens and compact models with

10x zoom capability were particularly well received in the

market. Moreover, with the launch of the Companys first

digital SLR camera, Matsushita has a stronger lineup to meet

a wider range of customer needs. As a result, the Company

recorded much higher sales of digital cameras in f iscal

2007, particularly in the U.S. and Europe. Going forward,

Matsushita will continue to launch a steady stream of

attractive cameras worldwide by drawing on its unique

technologies to enhance picture quality and features.

The LUMIX series of digital cameras including

compact models with a 28mm wide angle lens

and a wide range of functions

An HD BD recorder with an internal HDD

An HD LCD TV featuring IPS technology



A compact notebook PC with vastly improved

shock and water resistance

An SD Memory Card camcorder

capable of HD recording

4GB SDHC Memory Card

In digital video cameras, Matsushita

launched new products in December 2006

that can record HD video. SD Memory Card

camcorders in particular were popular due to

their high picture quality, compact and rugged

design, and dust-resistance, leading to strong sales.

Amid growing global demand for high picture quality in

recording, Matsushita plans to offer a wider lineup of HD

video cameras.Amid rising demand, especially overseas, sales of

notebook PCs continued to grow in fiscal 2007 as light-

weight products featuring extended battery life and rugged

designs were well received in major markets including the

U.S., Europe and Japan. In March 2007, Matsushita

launched new notebook PCs that weighed less than

previous models, were significantly better at withstanding

shocks when dropped, and incorporated drip-proof key-

boards, a feature currently in high demand from customers.

These kinds of features were well received, helping the

Company to maintain its leading share in the domestic

mobile PC market in 2006. Matsushita will continue to work

to respond quickly to customer needs.

Growing demand for

bridge media led to

increased sales of

SD Memory Cards in

fiscal 2007, particularly for use

in products such as flat-panel TVs, digital

cameras and mobile phones. In fiscal 2007, Matsushita

launched a new 4GB SDHC Memory Card* to meet rising

consumer needs related to the recording and storage oflarge volumes of data such as HD video. This product

enables Matsushita to respond to demands for high-speed,

reliable recording and large data storage capacity, which

are required for HD movies and other applications.

Matsushita will therefore continue to focus on enhancing the

storage capacity of SD Memory Cards.

Looking ahead in the AVC business, Matsushita will

promote more HD-compatible products and universal

design (UD) as it seeks to further develop its 3D value

chain strategy. Based on this approach, the Company will

accelerate the development of products that make it easier

and more convenient for people to enjoy exciting audio-

visual experiences. Furthermore, Matsushita will actively

develop its AVC business globally, aiming to ensure

sustainable growth and improve profitability.

* SDHC (SD High-Capacity) Memory Cards are based on the new SD

Memory Card Specifications (Version 2.00) which enable the development

of SDHC Memory Cards with capacities up to 32GB.



In fixed-line communications, Matsushita is

focusing business strategies on home networks,

encompassing in-home communications equip-

ment, TV door intercom systems and other

products; office networks, including communica-

tions equipment, digital color multifunction

products (MFPs) and other office products; and opticaldevices such as optical disc drives.

In fiscal 2007, in home networks, TV door intercom

systems with wireless color monitor handsets continued to

be well received by Japanese consumers. In addition,

Matsushita launched its HD-PLC* adapter in Europe and

Japan following an initial release in the U.S. in the previous

fiscal year. This product enables high-speed data transmis-

sion over existing power lines by simply plugging the

adapter into an electrical outlet. In office networks,

Matsushita maintained one of the leading market shares for

private branch exchange (PBX) products. This reflected

strong sales, particularly overseas, of models that boast

greater functionality and user-friendliness. Sales of new full-

color digital MFPs were also favorable. In the optical

devices field, Matsushita launched Blu-ray Disc Drives and

continued to lead the industry in developing slimmer, lighter

disc drives by building on its success with the DVD Super

Multi Drive, the industrys thinnest at just 9.5mm. Overseas,

Matsushita worked to further develop its optimal global

Fixed-line

Communications

manufacturing framework with the launch of PBX handsetproduction in Vietnam in October 2006.

In fixed-line communications, Matsushita will continue to

supply products based on cutting-edge technologies,

aiming to create modes of communication focused on key

concepts such as ease-of-use, convenience, peace of mind

and security.

* HD-PLC: High Definition Power Line Communication

Power OutletsGateways to the Network

WWW

Camera

PC

Router

PLC adapter

PLC adapter

Receiver (STB)

PLC adapters readily allow the creation of

convenient communication networks



In mobile communications, Matsushita offers a wide range

of products, from mobile phones, where the Company has

advanced technologies, to base stations and other commu-

nications infrastructure equipment.

In fiscal 2007, mobile number portability (MNP) was

introduced in Japan in October 2006, triggering more

intense competition among mobile phone handset manu-

facturers. In this environment, Matsushita resumed ship-

ments of handsets to SOFTBANK MOBILE Corporation andKDDI CORPORATION. The Company also launched new

mobile phone handsets for NTT DoCoMo, Inc. such as the

P903iTV handset compatible with one-segment terrestrial

digital TV broadcasts that combines Matsushitas high

picture quality, high reception and energy-saving technolo-

gies, and the P703i, the worlds thinnest handset at just

11.4mm*1.

Meanwhile, aiming to reduce the lead time and cost of

development, Matsushita formed a joint venture called

ESTEEMO Co., Ltd. with NEC Corporation, and another

joint venture called Adcore-Tech Co., Ltd. with NEC, NEC

Electronics Corporation and Texas Instruments Incorporated.

Matsushita will use both of these new companies to

accelerate the development of common software and

hardware platforms for mobile phone handsets. In another

move, Matsushita teamed up with companies such as NTT

DoCoMo, the Vodafone Group, NEC and Motorola, Inc. to

set up the LiMo Foundation, which will work on developing

a Linux*2-based OS for mobile phones.

Through these initiatives, Matsushita plans to boost the

efficiency of product development and enhance cost

competitiveness by utilizing the Linux OS platform and

sharing core technologies such as high-speed image and

voice transfer methodsone of the Companys strengths.

Matsushita also aims to lead the industry in responding to

advances in more sophisticated, higher-speed communi-

cations infrastructure and mobile services.

*1As of February 2007; clamshell-type 3G (W-CDMA) phones

*2 Linux is a registered trademark of Linus Torvalds in the United States and

other regions.

Mobile Communications

705P for Softbank Mobile

Thin but easy to open

thanks to a one-push

mechanism, packaged in a

smart, easy-to-carry body

W52P for KDDI

A polished metal body

with bright colors used for

the inside and exchange-

able covers that allow

users to customize

designs to their own taste

P903iTV for NTT DoCoMoStriking TV images thanks to a mobile

PEAKS processor realizing high

picture quality, and excellent

reception with a diversity antenna

P703i for NTT DoCoMo

A simple and uncluttered ultra-thin

body at just 11.4mm, presented in

stainless steel to give a refreshingly

new, high-quality feel



A dome network security camera from

the i-pro series delivering high picture

quality over IP Networks

Matsushitas automotive electronics business encompasses

two priority areas: automotive multimedia equipment such

as car AV and car navigation systems, and components

and devices that promote safety, environmental preserva-

tion and energy efficiency.

In automotive multimedia, Matsushita recorded strong

sales of the Strada series of car navigation systems with

digital tuners that allow viewing of high-quality terrestrial

digital TV broadcasts in Japan, leading to a higher share inboth the automaker and consumer markets. Meanwhile,

with the growing popularity of Electronic Toll Collection

(ETC) systems, Matsushitas ETC terminals continued to be

well received in the Japanese market. This was illustrated in

February 2007 when Matsushita became the first company

in the industry to reach the total production mark of 5 million

units. Overseas, sales of car audio equipment to

automakers were strong, as were sales of rear-seat

entertainment systems in North America.

In components and devices, the Company increased

sales of a variety of products that improve environmental

performance, safety and security.

These included devices for hybrid vehicles and lighter

more compact components that enhance fuel efficiency, as

well as car-mounted cameras and smart entry systems that

contribute to safety and security.

Leveraging the Groups extensive advanced technologies

and meticulous, quality-focused manufacturing approach,

Matsushita will continue to contribute to the creation of

automobiles and a motorized society that are both safe

and inspiring.

Automotive ElectronicsIn the system solutions business, Matsushita conducts

business in a variety of fields including security systems,

broadcasting systems and business solutions. The Company

draws on its advanced technologies and R&D resources to

deliver optimized solutions for customers.

Seeking to capture rising demand in the security field in

fiscal 2007, Matsushita launched new security system

products compatible with an integrated IP network platform*,

and a series of security products. Megapixel networkcameras that realize high picture quality sold particularly

well in fiscal 2007. Meanwhile, amid the spread of terrestrial

digital broadcasting in Japan, Matsushita maintained its

high market share in digital set-top boxes for cable TV. It

also continued to win strong support for its HD cameras

from TV broadcasters. Furthermore, the Company recorded

higher sales of IC card verification and settlement systems,

payment terminals for logistics industries, and wireless

systems for business users.

Going forward, Matsushita will expand its solutions

business by focusing on developing and providing opera-

tional support and related services in three main areas:

Security for the ubiquitous networking society; Cross-media

to support the growing trend toward broadcasting and

communications integration; and Mobility, including IC card

electronic settlement and other systems that support a wide

range of businesses.

* This industry-first platform promotes increased functionality and efficiency

by combining AV/information systems for video security and access control

with equipment systems.

System Solutions

The Strada Car Navi Station F Class with 4 tuners

and 4 antennas that receive full-segment

terrestrial digital broadcasts



In home appliances, Matsushita supplies a range of products related to food, clothing and housing in the fields

of household appliances, refrigeration, air conditioning, heating, healthcare systems, lighting and environmental

systems. In all these fields, Matsushita proposes new lifestyles by developing value-added products that meet

growing interest in healthy living and rising needs in environmental preservation and energy conservation.

In fiscal 2007, hit products that take advantage of the Companys unique technologies won a strong market

response. These included tilted-drum washer/dryers that utilize a heat-pump drying system, and air condition-

ers with an automatic airflow control mechanism and a built-in automatic air filter cleaning system. Moreover,

with the spread of all-electric homes, sales of induction heating (IH) cooking equipment and natural-refrigerant

water heating systems grew, helping to drive an overall increase in sales in home appliances.

Going forward, by working to generate synergies through enhanced cooperation among different busi-

ness fields, Matsushita will offer new value for living that raises the quality of life while minimizing environ-

mental impact.

HOME APPLIANCES



Matsushita has developed a range of air conditioners with anti-bacterial heat

exchangers and new deodorizing filters that require no cleaning or replacement for

10 years* thanks to built-in automatic cleaning technology created by the vacuum

cleaner business. These air conditioners have also attracted attention in the

Japanese market for their automatic airflow control mechanism that makes air

currents more comfortable for users.

* The Companys anti-bacterial heat exchangers have been certified as effective for a period

equivalent to 10 years based on air conditioner annual usage time in compliance with the JIS

C9612-2005 standard. The new deodorizing filters have been certified as effective for a

period equivalent to more than 10 years in a room where 10 cigarettes are smoked every

day (Matsushita estimates).



Household Appliances/

Refrigeration,

Air Conditioning and Heating

Matsushitas NA-VR1100 series of

tilted-drum washer/dryers utilize a

heat-pump drying system that

requires no electric heater or water

for the drying process

Comparison of Power and Water Required for

Washing and Drying (Annual)

*Based on a load of 6kg washed and dried everyday for one year.

0

2,000

0

60,000

1,460

529.25

54,750

22,995

NA-V81(PreviousMatsushita model)

NA-VR1100(Heat-pump dryingsystem model)

Waterconsumption

Electricityconsumption

kwh L

In household appliances, Matsushitas main business

areas include washing machines, dishwasher/dryers,

vacuum cleaners, IH cooking equipment, microwave

ovens, rice cookers and other products related to house-

work and food preparation, as well as sanitary equipment

and various key devices such as power supply inverters

for microwave ovens.

In fiscal 2007, Matsushita further upgraded its tilted-drum

washer/dryers to respond to needs for greater speed, less

energy usage and lower noise during washing and drying

cycles. By incorporating a high-speed, energy-saving heat-

pump based on technologies developed for its air condi-

tioners and a new stainless steel drum, Matsushita achieved

a significant reduction in water consumption and drying

times. In addition, the Companys tilted-drum washer/dryers

now lead the industry in terms of energy economy*.

In dishwasher/dryers, where Matsushita has led the

market since it produced Japans first model 46 years ago,

the Companys aggregate production reached 5 million

units in May 2006. This illustrated Matsushitas consistent

efforts to help reduce housework time and offer more user-

friendly products. Built-in dishwasher/dryer models sold

particularly well during the year under review, thereby

maintaining an approximate 60% share of the Japanese

market (Matsushita estimates). In cooking equipment, sales

of IH cooking equipment and steamer/microwave ovens

were strong. Matsushitas IH cooking equipment that can

be used with aluminum pots remained popular in the

market. The Companys integrated production system

including IH coils realized high quality, helping Matsushita to

maintain its dominant share in the Japanese market. Sales

of steamer/microwave ovens also grew in Japan on the

back of popular products that offer new cooking methods

by combining three heat sources: microwave, super-heated

steam, and a conventional heater.

Overseas, Matsushita worked to expand its business in

China, where demand for washing machines continues to

grow, by starting full-scale local production and sales of

tilted-drum washing machines. In other Asian markets such

as Thailand, Malaysia and Indonesia, the Company

launched the Aquabeat series of fully automatic washing

machines. Aquabeat realizes a significant improvement in

washing capability with a new powerful wash cycle that

rapidly converts detergent into foam. Sales of this model

were particularly strong in Malaysia where Aquabeat

captured the leading market share. In cooking equipment,

sales of microwave ovens increased in Europe, South

America and Russia.

* As of September 28, 2006, for drum washer/dryer models.



U-Vacua high-performance vacuum insulation, which

boasts excellent insulation properties, has contributedto an increase in refrigerator storage space

In refrigeration, air conditioning and heating, Matsushita

manufactures a wide range of consumer- and industry-use

products. These include air conditioners and refrigerators,

vending machines, and natural-refrigerant water heating

systems, as well as compressors and other key devices used

in refrigeration and air conditioning products.

In fiscal 2007, sales of air conditioners, large-capacity

refrigerators and natural-refrigerant water heating systems

remained strong. In particular, air conditioners that require

less cleaning successfully tapped market needs. In this

area, Matsushita launched air conditioners featuring built-in

automatic cleaning technology used in its vacuum cleaners.

With this technology, internal filters and anti-bacterial and

deodorizing filters do not require cleaning or changing for

10 years. The products automatic airflow control mechanism

that optimizes air currents for heating and cooling was also

well received. As a result, air conditioners overall captured

the leading share in the domestic market. Meanwhile,

leveraging its many years of experience in insulation and

refrigeration technology, Matsushita developed the U-

Vacua series of high-performance vacuum insulation

boasting the worlds highest level of thermal insulation.

This material was used to develop new refrigerator models

with thinner casings to boost storage space. This innova-

tion helped the Companys refrigerators to secure the

leading market share in Japan. Overseas, models that use

direct and indirect refrigeration methods separately solved

the problems of drying and frosting, and also showed an

increase in sales in China.

Looking forward, responding to growing demand for

products used in all-electric homes such as IH cooking

equipment and natural-refrigerant water heating systems,

Matsushita plans to enhance its product lineup and sales

capabilities, and strengthen collaborative efforts with MEW.

Through these initiatives, Matsushita will continue develop-

ing high-value-added products underpinned by environ-

mental technologies and universal design that customers

can use easily and with confidence.

In 2005, Matsushita established the China Lifestyle

Research Center at Panasonic Corporation of China to

identify the needs of Chinese consumers related to food,

clothing and housing. Based on the data collected through

the centers activities, the Company will continue to develop

products tailored to local needs and lifestyles centered on

China and other Asian countries. In terms of manufacturing,

Matsushita will reorganize its production bases from the

perspective of creating an optimal manufacturing framework

to further enhance the cost-competitiveness and attractive-

ness of its products. And by integrating research and

development divisions and enhancing its ability to conduct

front-loaded product development, Matsushita aims to

secure global growth and enhance profitability.

Comparison of Insulation Material Thermal

Conductivity (W/mK)*1

0

0.05 0.0450

0.0240

0.00800.0050

0.0012

Glasswool

(W/mK)

Toughenedpolyurethane

foam

Silica-Vacua

A-Vacua U-Vacua*2

*1 Heat-flow method (in compliance

with JIS-A1412, ASTM-C518A and

ISO 830 standards), assuming atemperature of 24C

*2 U-Vacua (Ver. IV)



AYA PASSION order-made digital hearing aids

fit snuggly in the wearers ear canal

Matsushitas healthcare systems business supplies health-

care and medical equipment ranging from blood glucose

monitoring systems and ultrasound diagnostic equipment,

to laser devices and hearing aids.

In fiscal 2007, mainstay blood glucose monitoring

systems maintained their leading share in the domestic

market with increased sales. A new in-the-ear, tailor-made

hearing aid, which can be adjusted with a maximum of 32

audio channels, also sold well after i ts launch in June 2006.

The hearing aid fits comfortably into the users ear canal

owing to a high level of technical craftsmanship, while audio

quality can be optimized to the surrounding environment.

Matsushita will continue to target growth in blood

glucose monitoring systems and hearing aids, products that

contribute to a better quality of life. At the same time, the

Company will strengthen its lineup of ultrasound diagnostic

devices, digital X-ray equipment and other products for

medical institutions and specialists, ultimately aiming to

contribute to the realization of a society where patients can

access reliable, high-quality healthcare services at reason-

able cost.

Healthcare Systems/

Lighting/

Environmental SystemsThe lighting business consists of general lighting products

including fluorescent and incandescent lamps, industrial-

use light sources such as LCD backlights, electronic flash

units for cameras and related equipment.

In the year under review,

a Ar2007 Annual Report

Documents

Transcript of a Ar2007 Annual Report